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The Situation Room
President Obama Talks Debt Ceiling; Lance Armstrong Coming Clean?; Armstrong Apologizes to Livestrong Staff; High Demand for Flu Shots; Politics with "No Labels"; Convincing Washington to Get Along; Why Your Paycheck's Smaller; Cuba Drops Travel Restrictions; Two Inaugurations, Lincoln's Bible
Aired January 14, 2013 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JOE JOHNS, CNN ANCHOR: Happening now: President Obama draws a line, which Republicans already insist they're going to ignore. Welcome to a new year of Washington gridlock.
Lance Armstrong is apologizing. But what exactly is he admitting he's done wrong?
And Suze Orman is joining us to explain why you will have to spend less money this year and what you need to do to make up for it.
Wolf Blitzer is off today. I'm Joe Johns. You're in THE SITUATION ROOM.
We begin with Washington's latest standoff. During a White House news conference today, President Obama told congressional Republicans they will not, in his words, collect a ransom by demanding spending cuts as a condition for raising the debt ceiling.
The House of Representatives is back in session today, too, and Republicans are just as adamant, insisting they won't raise the debt limit unless the president goes along with spending cuts.
Let's go live to CNN White House correspondent Brianna Keilar.
BRIANNA KEILAR, CNN WHITE HOUSE CORRESPONDENT: Hi there, Joe.
President Obama stating very clearly today that he will not negotiate deficit reduction, tax increases and spending cuts attached to the debt ceiling. This, of course, does follow that bruising battle the year before last, where he did negotiate on the issue, and the U.S. nearly went to the brink of default. He said that Congress has to pay the bills that it's already racked up.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: You don't go out to dinner and then, you know, eat all you want and then leave without paying the check. And if you do, you're breaking the law. And Congress is -- should think about it the same way that the American people do.
You don't -- now, if Congress wants to have a debate about maybe we shouldn't go out to dinner next time, maybe we should go to a more modest restaurant, that's fine. That's a debate that we should have.
(END VIDEO CLIP)
KEILAR: In this press conference that was called last minute in the East Room, President Obama said he will negotiate a deal on deficit reduction, but not, as he put it -- quote -- "with a gun to the head of the American people."
As you know, Joe, Republicans are saying they're not going to increase the debt ceiling unless they get spending cuts in return. So, it really throws into question, as President Obama obviously is trying to disarm them, trying to make moot, really, this one pretty hefty card they're able to play here throughout this battle, it throws into question how tackle things like entitlement reform and tax reform and also those spending cuts that were only put off for a couple months, those spending cuts that were set to kick in at the end of the month, how all of that plays out.
JOHNS: Brianna, for the first time, the president actually responded to questions about the administration not having enough women in the second-term Cabinet. What did he say?
KEILAR: He stressed his record on this during his first term, that Hillary Clinton was the secretary of state, still is, but is going to be stepping down and will be replaced by a man. He stressed that Janet Napolitano is heading the Department of Homeland Security and at least for now appears to be staying there. He stressed as well that he appointed two women to the Supreme Court. And he also told people to essentially wait a sec. He urged some patience.
(BEGIN VIDEO CLIP)
OBAMA: I would just suggest that everybody kind of wait until they have seen all my appointments, who's in the White House staff and who's in my Cabinet, before they rush to judgment.
(END VIDEO CLIP)
KEILAR: But for now, Joe, there is still some criticism over this because his recent picks, which really are top Cabinet posts, Treasury, state, defense, CIA director, have all been white men and that has rankled a number of critics, particularly female critics.
JOHNS: Brianna Keilar at the White House, thank you for that.
CNN chief political analyst Gloria Borger is with me here in THE SITUATION ROOM right now. And, you know, of course, we have got some quick reaction from House Speaker Boehner
GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Yes, boom.
JOHNS: Absolutely. Let's just put it up on the screen and I will read it to you.
The American people do not support raising the debt ceiling without reducing government spending at the same time. The consequences of failing to increase the debt ceiling are real, but so too are the consequences of allowing our spending problem to go unresolved."
So it certainly appears we're set up for another major showdown already.
BORGER: We are. I think it's going to be a bigger showdown in fact than the fiscal cliff. You know, the president today said -- quote -- "We have to stop lurching from crisis to crisis to crisis." Then he went and set the stage for yet another crisis, right? This time, of course, it's over the debt ceiling.
And it's going to be big, because it really reflects two different visions of what the debt ceiling is all about. For the president, you heard today, it's about paying your bill, going to a restaurant, picking up the tab for food you have already eaten. Fine.
JOHNS: Very commonsense, yes.
BORGER: Very commonsense. For Republicans, it's about solving a problem, making a government that is too big smaller and getting control of runaway spending on entitlements like Social Security and Medicare and fixing a long-term problem. It's not just about paying the bills. It's about the future.
JOHNS: Right, but there are also a lot of political calculations in here. And I assume they're very close to the political calculations we saw in the last crisis.
BORGER: Yes, they are, although, you know, in the last crisis it was very clear that the president had the leverage. He had just won the election. He had won an election over the tax issue and the Republicans lost on the tax issue.
They're pushing that so far off the table that I don't even hear them talking about tax reform anymore. The president is making a gamble here, that the public will see the Republicans as irresponsible and absurd, as he called them, that you can't let the United States of America default, that's not who we are, and that the American public will be embarrassed by this fight.
The Republicans are making the calculation, you know what, the public is going to be on our side, because we have to get on a path of fiscal sustainability over the long term so they're going to be with us, they're going to want spending cuts.
JOHNS: We have been measuring the political pressure on the speaker as it builds, it seems, to a big climax here. How much pressure is he in right now?
BORGER: Huge amount of pressure. Don't forget, he didn't have a great time in the fiscal cliff fight. He couldn't bring a majority of his own caucus to vote for that final proposal. This time, his own caucus has put him on notice. A., don't you dare propose anything that doesn't have a majority of us on board to begin with. And, B., we want dollar-for-dollar parity. In other words, every dollar you raise on the debt limit, we want a dollar of spending cuts. That's a very difficult, almost impossible task, unless you get some kind of grand bargain, which, since these two groups are talking past each other, it doesn't seem like that's a possibility.
JOHNS: We will see. And the calculations certainly could end up affecting everybody's pocketbook.
BORGER: Yes, and every piece of legislation that is on the table, Joe, immigration reform, gun control. If these people are angry at each to, they're not going to get anything done.
JOHNS: True. Thanks so much, Gloria Borger. Good to see you.
BORGER: Thanks.
Just in to CNN: some very dramatic poll numbers on how the American public feels about guns. They show broad support for tougher gun control measures. A just released Pew poll shows 85 percent of Americans favor background checks for private gun sales and sales at gun shows. Only 12 percent are opposed. Clear, but smaller majority favor bans on semiautomatics and assault-style weapons.
Fifty-eight percent say ban semiautomatics; 55 percent say ban assault weapons. The polls also shows only 40 percent favor an idea being pushed by the National Rifle Association, having more teachers and school officials carrying guns.
On that topic, Vice President Joe Biden met with House members and Cabinet officials today preparing to give the president his task force's recommendations on how to reduce gun violence.
CNN White House correspondent Dan Lothian join us live now -- Dan.
DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: And the vice president also met with the president today. They went other some proposals. The president saying that later in the week, he will be outlining some specifics about watt administration needs to do. There will be no doubt some resistance to what the president will be offering. But the president says that he is not worried about the politics.
(BEGIN VIDEOTAPE)
LOTHIAN (voice-over): President Obama says he's already reviewing the vice president's recommendations aimed at tackling gun violence.
OBAMA: How we are gathering data, for example, on guns that fall into the hands of criminals and how we track that more effectively. There may be some steps that we can take administratively as opposed to through legislation.
LOTHIAN: But strong resistance to executive orders from some gun right advocates who fear their Second Amendment rights might be put at risk.
Vice President Biden, who has been tasked with finding answers, meeting with everyone from gun rights groups to the entertainment industry, sat down with House Democrats on a task force put together by House Minority Leader Nancy Pelosi.
But what's been promoted as a bipartisan effort has yet to include House Republicans. This debate has spread from Washington to state and local governments. Maryland Governor Martin O'Malley's putting together his own proposals to reduce violence.
GOV. MARTIN O'MALLEY (D), MARYLAND: There is a sickness in our country. And that sickness is gun violence.
LOTHIAN: New York Mayor Michael Bloomberg, who joined O'Malley and other leaders at a summit in Baltimore, is putting pressure on the White House and Congress.
MICHAEL BLOOMBERG (I), MAYOR OF NEW YORK: Enough is enough. It's time for Congress and the White House to put public health above special interest politics.
LOTHIAN: The group he co-founded, Mayors Against Illegal Guns, has released a new TV ad calling for gun control.
UNIDENTIFIED MALE: Enough.
UNIDENTIFIED FEMALE: Enough.
UNIDENTIFIED MALE: Enough.
UNIDENTIFIED FEMALE: A line has been crossed in Newtown.
LOTHIAN: But the NRA says the focus should be on mental health issues and violent entertainment, not gun control. And the group's president raised doubts about an assault weapons ban getting through Congress.
DAVID KEENE, PRESIDENT, NATIONAL RIFLE ASSOCIATION: You don't want to bet your House on the outcome, but I would say that the likelihood is that they're not going to be able to get an assault weapons ban through this Congress.
LOTHIAN: It may be a steep climb, but it has the support of the president, some members of Congress, and the police chief in Newtown, Connecticut.
MICHAEL KEHOE, NEWTOWN POLICE CHIEF: Ban assault weapons, restrict those magazines that have so many bullets in them.
(END VIDEOTAPE)
LOTHIAN: Now, as for the vice president not meeting with House Republicans, a source familiar with the talks tells CNN that other members of Congress will be brought into the process once they start exploring legislative options Joe.
JOHNS: Dan Lothian at the White House, thanks for that, Dan.
A quick programming note. This Wednesday, be sure to watch a special gun control town hall on "ANDERSON COOPER 360." We will break down all the issues. That's Wednesday at 8:00 Eastern, only on CNN. Up next: Lance Armstrong says "I'm sorry," but he hasn't said "I did it," at least not yet. Hear why we could hear him say those words very soon.
Plus, tracking the flu with the smartphone -- the new way you can find out who is infected and where they are.
(COMMERCIAL BREAK)
JOHNS: Getting a flu shot was one of the more popular activities you could engage in recently. That's a story we be coming up with in a minute.
First, we have a hint of what Lance Armstrong will tell Oprah Winfrey in his interview. The cyclist apologized to the staff at the LIVESTRONG Foundation today. This week, we will find out if the one- time champion is ready to come clean about whether he doped his way to victory.
Our Ed Lavandera has more from Dallas -- Ed.
ED LAVANDERA, CNN CORRESPONDENT: Hey, John. Sorry about that.
Lance Armstrong made a visit to the LIVESTRONG Foundation this afternoon, met with the staff there for about 15 to 20 minutes and apologized to them for everything that he's put them through, but stopped short of admitting that he had used steroids.
(BEGIN VIDEOTAPE)
LAVANDERA (voice-over): It's a script that would make a Hollywood writer jealous. Cycling athlete gets cancer, nearly dies, but heroically comes back to win the world's most famous race, not once, not twice, but a record-breaking seven straight times. Oh, and, by the way, he also starts a cancer foundation which has raised $470 million, and has provided inspiration to millions around the world.
But a dark cloud hovering over this story never blew past. Suspicions that grew into allegations that Lance Armstrong used performance- enhancing drugs to accomplish his incredible feats. The suspicions were confirmed in October when the United States Anti-Doping Agency released thousand of pages of evidence of what it said was a sophisticated doping program.
Armstrong was stripped of his Tour de France titles and banned from all Olympic sports for life. One by one, his sponsors have left him too. Late last year, Armstrong was forced out from Livestrong, the cancer charity he founded.
Armstrong has kept a low profile at his Austin home since the report was released. But Armstrong's repeated denials other the years to protect his name have angered many.
LANCE ARMSTRONG, FORMER CYCLING CHAMPION: I've said it for seven years. I've said it for longer than seven years. I have never doped. I can say it again. But I've said it for seven years. It doesn't help.
LAVANDERA: Former teammates found guilty of doping themselves went on record.
REPORTER: Did you see Lance Armstrong using other performance enhance drugs?
UNIDENTIFIED MALE: At times, yes, different training camps.
UNIDENTIFIED MALE: He took what we all took. Really no difference between Lance Armstrong and I'd say the majority of the Peloton, you know?
LAVANDERA: Repercussions. So why is he doing this now? One reason could be hope a confession might give him a shot at resuming his competitive triathlon career, for which he is banned for life. At age 41, he doesn't have much time left to make a clean start in another sport.
(END VIDEOTAPE)
LAVANDERA: And so, that interview's probably taking place as we speak now, Joe, down there in Austin, and it's scheduled to air Thursday night on Oprah Winfrey's network.
JOHNS: Ed, give us some sense as to whether we think there is a legal problem for Lance Armstrong.
LAVANDERA: Well, Joe, he's still facing a lot of problems that are potential pitfalls out there. So, that's why, maybe they'll be watching closely to what extend he confesses. What he confesses to. He's got sponsors who have paid bonus money for winning the Tour de France titles. Some of them say they'll be watching this closely to see what he confesses to and whether or not they will sue to regain some of that money. There was also "The Sunday Times" newspaper that Lance Armstrong sued for libel, and they had to pay Lance Armstrong some money, they want that back.
So, there are still plenty of issues out there that Lance Armstrong is facing -- Joe.
JOHNS: Not to mention the questions about rehabilitating his image. Thanks so much, Ed Lavandera.
LAVANDERA: A lot of questions. Thanks, Joe.
JOHNS: Getting a flu shot was one of the more popular activities this weekend. If you can find a flu shot. Health officials insist there's no shortage of the flu vaccine. But demand has never been higher.
CNN's Mary Snow joins me now with more -- Mary.
MARY SNOW, CNN CORRESPONDENT: Yes. And, Joe, this is just one small slice of the country, but New York is particularly seeing a surge in demand for vaccines because the governor issued a public health emergency for the state on Saturday. Now, that order gives pharmacies more latitude in being able to administer shots. But it also means that some pharmacies are now running short on supply.
(BEGIN VIDEOTAPE)
SNOW (voice-over): This pharmacy in Brooklyn has a sign telling people they give flu shots. But, inside, the best pharmacist Bassam Amin could do was put people like David O'Keefe on a waiting list.
BASSAM AMIN, WYCKOFF PHARMACY: Hopefully, we'll have flu shots for you tomorrow.
DAVID O'KEEFE: OK.
AMIN: I have 80 shots coming in.
O'KEEFE: OK.
AMIN: Your number will be 76.
SNOW: Amin ran out of vaccine on Sunday after New York's governor declared a public health emergency over the weekend. The declaration gives pharmacist the ability to give children flu shots. In New York, they ordinarily can only give vaccines to people 18 and older.
(on camera): What was this weekend like?
AMIN: It was chaotic. A lot of people come in in panic. They want to get the whole family immunized.
SNOW (voice-over): And it wasn't much different at bigger chains like Walgreens.
STACIA WOODCOCK, WALGREENS PHARMACY MANAGER: It's been a little bit insane, to be honest. As soon as the public emergency was declared, it was like the floodgates opened and everyone wanted their flu shot and they were coming in just in hordes looking to get it.
SNOW: This Walgreens replenished its supply of vaccines this morning. Other chains like CVS also reported shortages at some of its locations. And while there may be a shortage of flu vaccine in some places, there is no shortage of New Yorkers taking to social media to write about their experiences, like this tweet: "This flu is brutal. Not hungry, whole body aches like crazy, throat kills."
Some folks are capitalizing on disgruntled New Yorkers expressing themselves through social media. One app developer is tracking the flu in six cities including New York.
ADAM SADILEK, FOUNT.IN CEO: We download publicly available tweets, and then we put them through our machine learning system. (INAUDIBLE) based on what they tweeted and where they have been. And then plot them on the map.
(END VIDEOTAPE)
SNOW: He says he's getting millions of tweets from New Yorkers alone. Now, the important thing is manufacturers have told CNN there are still many doses to be shipped out. If you're having troubles finding flu vaccines where you live, there are many different Web sites that can help you find it in your area. One that's set up by the government is flu.gov, that's a good place to start -- Joe.
JOHNS: It certainly is. Thanks so much for that, Mary Snow.
SNOW: Sure.
JOHNS: It's a story you'll see first on CNN. Sarah Palin's reaction to the big Golden Globe wins for "Game Change," the movie about her vice presidential run.
(COMMERCIAL BREAK)
JOHNS: We now know the identity of the 16-year-old accused opening fire at a high school in California last week. Lisa Sylvester's monitoring that and other top stories in THE SITUATION ROOM.
Lisa, what do you have?
LISA SYLVESTER, CNN CORRESPONDENT: Hi there, Joe.
Well, the Kern County, California, D.A.'s office says the alleged gunman is 16-year-old Bryan Oliver. The teenager will be charged as an adult with two counts of attempted murder and two more of assault with a firearm. Oliver is accused of firing at two classmates, critically wounding one, while missing the other. A teacher and another worker at Taft Union High School in Taft, California, are credited with talking Oliver into surrendering to them.
And an adviser to former vice presidential candidate Sarah Palin is slamming a movie that depicted her performance in the '08 campaign. The political drama "Game Change" won three Golden Globes yesterday.
The aide told CNN's Peter Hamby, quote, "It comes as no surprise that the Hollywood foreign press recognized another Hollywood group, HBO, for their work of fiction and awarded a prize for best fictional filmmaking. The reality was an original American story, not a screenplay by people who only imagined events to fit their fiction."
And in other news, Cadillac has made history, winning its first Car of the Year Award at the Detroit Auto Show for the ATS. It's the latest bright sign for General Motors, which received the government bailout in 2009. The Dodge Ram won the Truck of the Year Award. It's the first time Chrysler has won the honor in 13 years. Ford was nominated in both categories but got shut out.
And the day royal watchers are waiting for, that's going to come in July. That's when the duchess of Cambridge is due to deliver a baby that could one day be crowned as Britain's monarch. It can't come soon enough for the duchess. Oh, yes, she's been suffering from acute morning sickness. Although the palace says her condition has improved since she was hospitalized last month.
And, of course, we wish them all very well. So that is the month to look forward to. I'm sure many of us will be looking forward to July. JOHNS: Absolutely, big month. Did you watch the Golden Globes, by the way?
SYLVESTER: I watched the second half of it. I saw some of the notable speeches and, bravo, I was just cheering for Ben Affleck. I was so, so thrilled, so happy for Ben Affleck.
JOHNS: Yes, real special moment for him.
Bill Clinton surprise cameo appearance, who wouldn't know? Yes. Lots of surprises.
SYLVESTER: I know, that was kind of nice. But, you know, they like to sprinkle in, have a few surprises in there for us. So all good stuff, Joe.
JOHNS: Thanks, Lisa.
If you got paid on Friday, you already know, there's less money in your paycheck. Suze Orman joins me to explain why and what you need to do to make up for it.
Plus, two big names in both parties join forces to solve the gridlock in Washington. Their solution coming up next.
(COMMERCIAL BREAK)
JOHNS: Back now to our big story: the standoff between President Obama and congressional Republicans over raising the nation's debt limit.
In New York today, a bipartisan pair of political pros tried to put together a group of lawmakers who are committed to the seemingly radical idea of getting along and finding common ground to solve the nation's problems.
Democratic Senator Joe Manchin, and former Utah governor and Republican presidential candidate Jon Huntsman called their partnership No Labels.
(BEGIN VIDEOTAPE)
JOHNS: Governor Huntsman and Senator Manchin join me now.
And, first question is the obvious. What's with the yellow ties, did you send out a memo today or was that by accident?
SEN. JOE MANCHIN (D), WEST VIRGINIA: We're working together across party lines.
JON HUNTSMAN (R), FORMER UTAH GOVERNOR: It's an auspicious color and today's an auspicious day, Joe, that's what it's all about.
JOHNS: All right. So, Governor, or I should say, Senator Manchin, you're also a former governor of West Virginia, the president came out swinging today against Republicans in his news conference. Let's listen.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: And Republicans in Congress have two choices here. They can act responsibly and pay America's bills, or they can act irresponsibly and put America through another economic crisis. But they will not collect a ransom in exchange for not crashing the American economy. The financial well- being of the American people is not leveraged to be used.
(END VIDEO CLIP)
JOHNS: Senator Manchin, he is talking about bipartisan, but you would agree that he's also playing politics here or no?
MANCHIN: I'm not going to second-guess what the president, his motives and everything. I can tell you, there's a lot of Democrats who believe we need to cut spending also. And we need to get our House financially in order.
With that, we're hoping it happens sooner than later. I've always been for the Bowles/Simpson approach, which was a big fix, so we don't go through these crises every two or three months. It's ridiculous. We've kicked the can so much, there's nothing left.
We've got to come to grips and sit down and work through this. It's taken longer than needed. That's why Congress -- it's really broken in Washington. It's really what no labels and why Jon and I are here.
We're looking for solutions and a venue that we can sit down and work out our differences. And this is the one I think works well.
JOHNS: Jon Huntsman, we're already hearing this discussion about raising the debt ceiling. From your position as a Republican, do you think it's appropriate for House Republicans led by Speaker Boehner to threaten not raising the debt ceiling?
HUNTSMAN: Well, members of Congress should be doing what's best for the economy because that's, then, best for the American people. No labels is about creating a group of problem solvers in Congress whether it's the debt ceiling, Joe, whether it's energy, whether it's immigration, whether it's tax reform.
What Congress lacks today and what we today rolled out, at least in part, is a group of congressional problem solvers, Republicans and Democrats alike. Who will agree going forward and, by the way, our goal by the end of the year is to get this group of problem solvers up to 75 or 80.
You can imagine Republicans and Democrats alike, 75 or 80 people in a room, talking about the possible, talking about problem solving on the key issues of the day. That's the way we're going to make progress and keep from becoming exactly what the 112th Congress was, the most unproductive congress in the history of the United States.
JOHNS: Excuse me, Governor, is it a good idea though for the Republicans to push a default of the U.S. on paying its bills?
HUNTSMAN: Well, I think we ought to let our credit rating probably drive this whole discussion. Because when we jeopardize our credit rating, I found as a governor, we had a AAA rated state. Joe knows everything there is to know about credit ratings. Then every American is affected. The cost of capitalism impacted. Our international competitiveness is impacted. That's not an answer. That's not a solution.
JOHNS: You both seem to be saying that Congress needs to come together and do a bit more compromise. But if you talk to Democrats on the left, Republicans on the right, including Tea Parties, of course, they say compromise is part of what's wrong with Washington that there's too much deal making. How do you address that?
MANCHIN: Joe, think about it. We have not had in two years, we have not had an organized meeting, a bipartisan by senators, Democrats and Republicans, to talk over the things you assume we're talking about. You know, we had the fiscal cliff and it was all about raising revenues.
We weren't going to do anything. And it took really going over the cliff a few hours to get it fixed. Now we're saying, OK, it's time to cut the expenses. Talking, well, we're going to go into default for that. It's ridiculous to have this nonfunctional, dysfunctional working relationship in Congress. I don't understand it.
HUNTSMAN: What we have forgotten, Joe, is the art of the deal. What we've forgotten how to do is what Joe did as a governor, what I did as a governor. Bringing in people of disparate political backgrounds and doing the work of the people.
Because if you don't get the work of the people done, which is exactly where we sit today, then you find the dysfunction of Congress makes your own country dysfunctional. And it begins to discolor and distort your very economy. Sadly enough, that's where we're headed.
JOHNS: Do you all agree that the extremes on both parties, the right and left, are actually the ones who run the Congress right now? Start with you, Senator.
MANCHIN: There's quite a bit of extremism. I don't need to tell you that, Joe. There's very few of us left in the middle. The so-called middle, if you will, has been shrinking and shrinking. If you look at where -- let's talk about follow the money.
We talk about that. A lot of the people are on the far left or far right of the extremes of both ends. That's where people get all excited, get involved. Either directly or their resources, their money behind in what they believe in. Sometimes it draws them further apart.
Tom Brokaw basically says that 75 percent of all of our congressional districts are bulletproof. So if you're there, and you've already established yourself, whether you're on the right or left, you're pretty well solid. So you only have to play to a certain core and that's not healthy. And so a lot of changes need to be made to make Congress work again. First would be maybe we should work five days and get to know each other a little bit better.
JOHNS: All right, well, that is another argument for another day about how congressional districts are configured.
MANCHIN: Right.
JOHNS: But I want to thank you, Senator Manchin, Governor Huntsman, for talking to us today.
Speaking of the economy, is it the right time to buy a house? Personal finance expert Suze Orman joins me with an answer you will want to hear.
(COMMERCIAL BREAK)
JOHNS: We're already two weeks into the New Year. So by now, you've probably gotten a paycheck that's noticeably smaller than last year's. One big reason is because of something that was intentionally left out the fiscal cliff fight, an increase in the payroll tax that funds Social Security.
Look for your paycheck stub and find the line that says "FICA," which, by the way, stands for Federal Insurance Contributions Act. The amount being deducted went up starting January 1st.
Joining me now is Suze Orman, the host of CNBC's "Suze Orman Show." Thanks for joining us. Good to see you again. Look --
SUZE ORMAN, FINANCIAL EXPERT: Thank you, sir.
JOHNS: -- break this down for us, will you? What is this payroll tax and why are they taking more of it out of people's paychecks?
ORMAN: Well, they're taking more out of people's paychecks because they're taking away something, it seems, that we didn't have, if that makes any sense. So we used to pay payroll tax to fund our deficits and then, because the economy was so horrible, they gave us a break on it of 2 percent.
Now, they're just adding that back in because they need money. So we're just paying more taxes, everybody is paying more taxes in order to pay the bills that we don't have the money to pay. It's really just as simple as that.
JOHNS: It's probably a little confusing for some people because when they were listening to the budget negotiations at the end of the year, people were telling us, well, the only people who are going to get a tax increase are people making more than $400,000. It turns out this goes from 4.2 to 6.2. Who is that going to affect?
ORMAN: It's going to affect absolutely every single person. The person it's really going to hurt are the people that are making $50,000 a year and all a sudden that's an extra $1,000 in taxes to them.
Believe it or not, that extra $100 or so a month really makes a difference between can they go out to eat, can they not. It really matters to them. So in many circumstances, in most circumstances actually, the people that are always hurt are the people that don't have enough money.
JOHNS: Right. So that's the question, is that the only hit people are going to take in their tax in 2013 as far as you can see or are there some other surprises?
ORMAN: We'll have to see if there are some other surprises. But it's not just for those -- and people need to be very clear about this. You know, everybody now has touted this figure of $400,000 if you're single, $450,000 if you're a couple. Many, many people get dividend checks.
Many people own stock or own property that, very possibly, they may sell, and the capital gains tax is going to change for people who have an income of -- adjusted gross income of $200,000 and $250,000, if they're a couple. They're going to add that extra 3.8 percent on.
So it's not going to be 15 percent. It's going to be 18.8 percent. Now, that could affect a lot of people, believe it or not. So I know that it sounds like a lot, that people are making $200,000 and blah, blah, blah, blah, who cares.
In New York, in San Francisco, in L.A. it's a big deal. So it could affect more people than you could imagine that it was going to affect.
JOHNS: And certainly creating an amount of uncertainty, if you will. Just today President Obama was talking about what could happen if Congress doesn't agree to let the government essentially pay its bills. Let's listen.
(BEGIN VIDEO CLIP)
PRESIDENT OBAMA: America cannot afford another debate with this Congress about whether or not they should pay the bills they've already racked up. If congressional Republicans refused to pay America's bills on time, Social Security checks and veterans benefits will be delayed.
(END VIDEO CLIP)
JOHNS: So the truth is the president and the Congress actually have to agree on all of this to end up getting a deal. But the question for you, Suze, is what are Americans supposed to do during a time of uncertainty? For example, if you're thinking about making a big purchase, should you do it now or wait until the president and the Congress figure things out?
ORMAN: The time has come, in my opinion that Americans realize that their future cannot be in the hands of politicians. That their financial future has to be held tightly right within their own grips. And if they don't have the money to buy something outright, if they have to put it on a credit card and pay the minimum payment due, if they aren't funding their retirement accounts fully or have an eight- month emergency fund or whatever it may be, this is not the time to be spending money you don't have to impress people you don't even know or like.
This is the time when you have to keep yourself out of poverty. You have to prepare for the what ifs. You cannot get yourself in a situation where you think that the government is going to say to you -- because they cannot even save themselves anymore.
So no, unless you are flush financially speaking, this is not the time for you to spend money on something big. Unless you can write a check and not even notice that the money is missing.
JOHNS: But that sets up another question. If your choice is between paying off all your bills or say, fully funding your 401k, which would you advise people to do?
ORMAN: If they have a 401k which matches their contribution, which means you put in a dollar and they give you 50 cents or some amount of money like that, that is free money. They cannot afford to pass that up.
However, after the point of the match where the corporation no longer gives you that 50 cents and/or if your corporation does not match at all, you are better off paying off your bills than putting money in a retirement account.
But here's the truth, why does it have to be all or nothing? Why can't you put some money away for retirement and pay, put some of that money towards bills? What would be great is if you could do both.
JOHNS: You know, after the real estate bubble burst, there were a lot of people waiting to sell their houses. Is this the time now you can sell your house or do you think given all the uncertainty with the government and the economy, people ought to continue to wait?
ORMAN: Well, if you need to sell your house, and there are different types of people out there. There are those people that owe more money than their house is worth. And they are thinking they better wait and see if it will come up. Don't wait. You shouldn't wait any longer because we got a one-year reprieve.
Which means if you have to do a foreclosure or a short sale, it was supposed to be as of January 1st of this year, you would owe taxes on the difference between what you sold the house for and what you owed the bank or what it was foreclosed upon for and what you owed the bank.
Starting next year, they have postponed that, starting next year you will owe taxes on that difference. If you're underwater on your home, you know you're not going to keep it. This is the year to absolutely sell it. If you want to buy a house, let's talk about that, is this a good year to buy a home? It absolutely is. Especially if you have at least 20 percent down, you can afford at least a 15 to 30-year fixed rate mortgage, you can afford the property tax, the insurance and maintenance and your job is secure, go ahead and buy, people, go and buy. This is the year to do so.
JOHNS: Suze Orman, it's always great to sit down and talk to you for just a couple of minutes. Best of luck to you in the coming year.
ORMAN: Thank you, see you soon.
JOHNS: President Obama's second inaugural is just one week away. This time next Monday, we should be wrapping up the inaugural parade. There are big changes in store from what happened four years ago.
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JOHNS: Here's a look at this hour's "Hot Shots." In Japan, troops dressed in camouflage participate in a military drill. In Austria, a woman walks her dog on a snowy day. In China, police barricade a residence where migrant workers protest. And in India, the sun sets over a mosque in Mumbai. "Hot Shots," pictures coming in from around the world.
For the first time in decades, people in Cuba can now travel to other countries without special papers. Under new rules that start today, most Cubans only need a passport and they can stay abroad for a lot longer. CNN's Patrick Oppmann joins me from Havana with more.
Patrick, will you explain these changes and what it means for everyday Cubans?
PATRICK OPPMANM, CNN CORRESPONDENT: Joe, you know, as you probably can guess, there's no shortage of red tape or bureaucracy here in Cuba. It seems some days there is a constant struggle to get anything done. And there's perhaps no more hated restriction than the restriction that kept people from traveling freely.
In fact, it was something that even people who supported the revolution here really detested. Starting today, Joe, people only need a passport. Many of those restrictions have gone away. We're seeing people all around Havana lining up sometimes around the block to get those passports.
That doesn't mean it's going to be easier, it's only going to be a little bit easier to travel. Most people here will still need visas to go to many countries like the United States. And of course traveling is very, very expensive, beyond the means of many, many Cubans.
The government has said not everyone is going to be able to take advantage of opening this quite significant opening. And that means that military officials who perhaps possess some secret information, sports stars who can make untold amounts more than they make here in Cuba, they won't be able to travel in this fashion. They'll have to go through a different process. We're still waiting to see if government critics who over the years haven't been able to travel freely, if this new opening will apply to them. All the same, Joe, people here in Cuba are enthusiastic about the idea that they could be reunited with family members. Many they haven't seen in decades -- Joe.
JOHNS: Put it in context for us, though. How much do Cubans actually make, the household income?
OPPMANN: You know, the average person here makes less than $20 a month. That's something of a false statistic because there are so many Cubans who help Cubans here sending money back via Western Union, which is now legal. And so it's something of a parallel economy.
As well, many Cubans perhaps have a job on the side. But in terms of just that state income, there's no way that anybody could ever earn enough to afford a very expensive plane ticket.
People here, Joe, always manage to find a way and already we're seeing signs that people are planning to take advantage of this opening and people very excited to travel, however they can pull that off.
JOHNS: Thanks so much for that, Patrick Oppmann in Cuba.
Coming up in our next hour, your flu questions answered by the CDC, he is joining us live.
(COMMERCIAL BREAK)
JOHNS: Taking a live look at the western or the National Mall side of the United States capital, for those of you in Washington, D.C., where in exactly one week President Obama's formal inauguration ceremony will take place.
That's what it looks like right now. They rehearsed it over the weekend, complete withstand-ins for the president and Chief Justice John Roberts. Monday's swearing-in ceremony is just part of the pageantry.
There's parades, inaugural balls, concerts and, of course, huge crowds. CNN's Brian Todd join us live from the National Mall with an update on all the preparations. Exciting time, Brian.
BRIAN TODD, CNN CORRESPONDENT: Well, Joe, it's all coming together here, less than a week out. Saw the shot you mentioned. That's the west front of the capital where the president's rise to the podium is being assembled. The flags are being draped, hundreds of seats up there for VIPs.
You got speakers now are being set up over here all along this reflecting pool on the west front of the capital. Jumbotrons are going to be coming up pretty soon, but possibly the most crucial part of the whole setup, thousand, of port-o-johns like those over there all over the mall now. You can't stage an event like this without those. This event may not be the same scale as four years ago, but has every bit the symbolism and the importance.
(BEGIN VIDEOTAPE)
TODD (voice-over): This year, it will be scaled down. If you call about 900,000 people scaled down. Officials say for President Obama's second inauguration, Washington's National Mall will have about half as many people as it did in 2009. But it's still a huge undertaking, millions watching on TV, Washington, a buzz with ceremony, symbolism, that big event feeling. What's crucial to know if you're going?
CAROL JOHNSON, SPOKESWOMAN, NATIONAL PARK SERVICE: If you're bringing kids, take their picture on your cell phone. Put your phone number, pin it to your coat. That's one of the big things, you know, we want to make sure that kids who come here are safe, that they have a good time.
TODD (on camera): How much of a problem has that been? A lot of kids get lost?
JOHNSON: No, I wouldn't say a lot of kids get lost but we want to absolutely avoid that.
TODD (voice-over): About 250,000 people have coveted tickets for areas close to the president's platform. Four years ago, many who had those tickets walked away angry, thousands never got past the security entrances on the periphery of the mall.
SENATOR CHARLES SCHUMER (D), JOINT COMMITTEE ON INAUGURAL CEREMONIES CHAIRMAN: One of the main reasons there was such holdups four years ago, number one reason was the huge amount of people, a record. But the number two reason was that people went to the wrong gates. They had to wait on line forever and then be told you got to go somewhere else.
TODD: Hundreds of confused ticket holders got stuck in Washington's Third Straight tunnel and never saw the inauguration.
(on camera): But this year the Third Straight tunnel's going to be closed for the inauguration and organizers have come up with a special app for ticket holders. The app has a map showing your current location. Then you just touch the color of your ticket and it will show you where the closest entrances are corresponding to the color of your ticket.
(voice-over): As always, law enforcement agencies from the Secret Service to the D.C. police, park and capitol police, will handle security. They'll close streets, air and water traffic will be restricted. This year's preparations have been replete with rehearsals with stand-ins playing the president, vice president, the chief justice.
The real president will have two swearing-ins, a public ceremony on Monday and a private one the day before. He'll use two bibles, one owned by Abraham Lincoln, the other by Martin Luther King Jr. Some advice for those attending soak it all in.
JOHNSON: Use the opportunity to see our monuments, memorials. I mean, this is part of the American story.
(END VIDEOTAPE)
TODD: Now, park service is advising people who come to the mall, that when a swearing-in is over, when the parade is over, don't rush off mall all at once. Take a stroll. Go to a monument or two. Become a tourist.
Big reason for that is because they don't want a lot of people crushing into D.C.'s metro rail system all at once, Joe, they want to avoid those bottlenecks there, only a couple of metro stops around here as you know. If everybody goes all at once, that's going to be kind of a nightmare -- Joe.
JOHNS: All right, do we have any idea how much this is going to cost?
TODD: You know, in the hundreds of millions. And the big question is, you know who is going to pay for all this. Well, much of the money raised for these events is from private donors. They pay for the inaugural, some of the equipment set up here.
Four years ago, President Obama raised around $50 million for his inauguration then. So a lot of it will be from private donors. Public money goes to the security arrangements.
JOHNS: Brian Todd on the Mall, thanks for that. If you can't make it down to the Mall, CNN's going to have it all right here on TV. Our coverage of President Obama's second inaugural spans two days: first, the official oath of office in a private ceremony, then Monday's public ceremony at the US Capitol.
Be sure to watch the presidential inauguration, starting at 9am Eastern Sunday and Monday right here on CNN.
